[asia-apec 1600] Cairns Group Meeting, Banff 9-12 Oct 2000

[APEC Monitoring Group]

 CAIRNS GROUP FARM LEADERS MEET IN BANFF
9 - 12 October 2000

Farm Leaders from the Cairns Group countries will meet alongside their Trade
Ministers in Banff, Alberta, Canada from 9-12 October 2000. The farm leaders
from 18 countries have organised a big program in Banff, which includes
seminars on trade policy, a strategic planning workshop and joint social
functions with ministers.

Following the meeting in Banff the farm leaders will be travelling to Geneva
and Brussels to deliver the message of the Cairns Group on farm trade
reform. In Geneva, the delegation of farm leaders will meet the
Director-General of the WTO, Mike Moore. In Brussels the farm leaders will
meet with groups in Europe who have an interest in ending protectionism in
European agriculture - such as consumers, exporters, aid agencies and
environment groups.

Background to the Banff meeting
When farm leaders meet in Banff they will emphasise that the level of
agricultural protection has not fallen as a result of the Uruguay Round of
trade talks. The mix of support has changed toward direct payments but the
consequence is the same: too much agricultural production in the wrong
places, which wastes scarce resources. By far the biggest waste is in the
rich markets of Europe, Japan, Korea, Norway and the United States.

The agricultural trade problem has been around for some time. It was centre
stage at the start of the Uruguay Round in 1986. The fact that it is still a
problem fifteen years later underscores the enormous political forces that
are brought into play with agricultural policy in protected markets.
History, culture, institutional capture, successful lobbying by farmers and
the concealment of the real costs involved are all factors behind the trade
problem.

Agricultural protection is a huge problem of global proportions. The prize,
however, is also huge if reform can be achieved. In 1999, the Department of
Foreign Affairs & Trade in Australia published a study ('Global Trade
Reform - Maintaining Momentum') which showed that a 50 per cent cut in
agricultural protection would be worth nearly US$90 billion every year to
the world economy.

Pushing for such a big prize is therefore worth doing. For many years the
Cairns Group, which comprises the agricultural exporting countries, has been
an important "external" force for change. Even though the Cairns Group has
proved an effective voice for reform, the task of reform is so large and the
prize so great that the arguments for reform need to be bolstered. The World
Trade Organization is underresourced, especially in the area of agriculture.
The WTO has only eight staff working on agriculture and yet this is where
the biggest distortions are in world trade.

In a nutshell education is the key. This education has to be done in ways
that communicate so the message gets across. Once that is done there is a
chance that the powerful political forces blocking reform can be overturned.

To overcome the powerful political forces resisting reform, equally powerful
counterforces need to be found. One of the most powerful counterforces is to
expose the enormous waste caused by protectionism. There are many reasons
why agricultural support through subsidies and border restrictions should be
removed. For example, the subsidies could be better spent elsewhere - either
on other needy programs or given back to taxpayers. Trade restrictions
hamper economic growth and poverty alleviation in many developing countries.
The environment suffers as a result of protectionist farm policies. The
burden of import restrictions falls on other exporters. Consumers have
restricted choices and pay too much for food. Yet each one of these
arguments - as valid as they are - are unlikely to be sufficient on their
own to overturn the powerful forces propping up the current system.

The answer lies in several of these arguments being communicated in concert
within the electorates of the countries with the greatest protection of
agriculture. These arguments need to be communicated within each country.
The Cairns Group farm leaders will be discussing this issue in Banff and
they will be publishing a new book titled "Solving the Problem - the
political economy of agricultural protection".